Goldcorp Announces Third Quarter Operating and Financial Results

TSX: G NYSE: GG

(All Amounts in $US unless stated otherwise)

VANCOUVER, Oct. 30, 2014 /CNW/ - GOLDCORP INC. (TSX: G, NYSE: GG) today reported adjusted quarterly revenues¹ of $1.1 billion, generating adjusted net earnings^1,2 of $70 million, or $0.09 per share, compared to adjusted net earnings of $190 million, or $0.23 per share, in the third quarter of 2013.  Adjusted operating cash flow^1,3 was $399 million, compared to adjusted operating cash flow of $375 million in the third quarter of 2013.  The Company also announced the on-schedule commencement of gold production at the Éléonore mine in Quebec, including first gold poured on October 1, 2014.

The Company reported a net loss for the quarter of $(44) million, or $(0.05) per share compared to net earnings of $5 million, or $0.01 per share, in the third quarter of 2013.  Both reported earnings and adjusted earnings were negatively impacted by a $36 million, or $0.04 per share, non-cash reduction in the value of low-grade stockpiles at Peñasquito. 

Third Quarter 2014 Highlights

• Gold sales¹ of 641,400 ounces on gold production¹ of 651,700 ounces.  
• Adjusted revenues of $1.1 billion.
• All-in sustaining costs of $1,066^1,4 per ounce.
• Adjusted net earnings of $70 million, or $0.09 per share.
• Adjusted operating cash flow of $399 million.
• Dividends paid of $122 million.
• Ramp–up at Cerro Negro in Argentina and Éléonore in Quebec progressing on schedule.

"The continued ramp-up of new mines Cerro Negro and Éléonore, coupled with stable performance at our existing mines position us for a strong finish to 2014," said Chuck Jeannes, Goldcorp President and Chief Executive Officer. "We expect to meet our 2014 production guidance, but the lower-than-expected production at El Sauzal due to pit wall instability and the second-quarter stoppage at Los Filos will cause gold production to be at the low end of our previously guided range of between 2.95 million and 3.1 million ounces.  With respect to cost guidance, the success of our Operating for Excellence programs has exceeded our expectations, with over $185 million of additional savings already realized through the first nine months of 2014 versus our previous target of $100 million for the year.  This performance is expected to help drive all-in sustaining costs toward the low end of our guided range of between $950 and $1,000 per ounce for the year.  With new project capital spending beginning to wind down, Goldcorp remains well-positioned for sustained growth in free cash flow in 2015 and beyond." 

Financial Review

Third quarter gold production increased over last year's third quarter despite the loss of gold production from the divestiture of Marigold earlier in the year and lower production from El Sauzal as a result of the suspension of operations due to pit wall instability.  Gold sales in the third quarter were 641,400 ounces on production of 651,700 ounces compared to sales of 652,100 ounces on production of 637,100 ounces in the third quarter of 2013. Silver production totaled 7.8 million ounces compared to 7.7 million ounces in the prior year's third quarter.  All-in sustaining costs were $1,066 per ounce of gold in the third quarter of 2014 compared to $995 per ounce in the third quarter of 2013.  The all-in sustaining costs for the third quarter of 2014 include a $41 million, or $64 per ounce, reduction in carrying value of the low-grade stockpile at Peñasquito due to improvements to the mine plan that defers processing of low-grade stockpiles to the end of the mine life and also recognizing lower anticipated recoveries from those stockpiles.  Excluding the impact of the reduction in carrying value, Goldcorp's all-in sustaining costs would be $1,002 per ounce in the third quarter of 2014.

Adjusted revenues of $1.1 billion were comparable to the third quarter of 2013.  Reported net loss in the quarter was $(44) million, or $(0.05) per share, compared to net earnings of $5 million, or $0.01 per share, in the third quarter of 2013. Adjusted net earnings in the third quarter totaled $70 million, or $0.09 per share, compared to $190 million, or $0.23 per share, in the third quarter of 2013.  Adjusted net earnings in the third quarter of 2014 primarily exclude the unrealized losses from the foreign exchange translation of deferred income tax assets and liabilities in the amount of $85 million, or $0.10 per share, unrealized losses on derivatives in the amount of $14 million, or $0.02 per share, and the impairment against the carrying amount of El Sauzal as a result of accelerating closure activities due to previously-reported pit wall instability in the amount of $13 million, or $0.02 per share.  Adjusted net earnings include the impact of non-cash stock-based compensation expenses which amounted to approximately $19 million or $0.02 per share for the quarter.  The reduction in carrying value of Peñasquito's low-grade stockpile inventory had an approximate impact of $0.04 per share.  Adjusted operating cash flow was $399 million, or $0.49 per share, compared to $375 million, or $0.46 per share in last year's third quarter. 

Mexico

At Peñasquito, gold production totaled 129,500 ounces in the quarter at an all-in sustaining cost of $1,142 per ounce.  Production decreased compared to the prior quarter as a result of lower grades and recoveries due to the supplementing of fresh ore feed with ore from stockpiles.   All-in sustaining costs increased over the prior quarter due to lower gold production, higher sustaining capital and higher operating costs attributable to the $41 million, or $288 per ounce impact of the reduction in carrying value of the long-term inventory stockpile.

Construction is well underway at the Northern Well Field ("NWF") project with completion expected mid-2015.  Contingency plans remain in place for fresh water supply to Peñasquito until the NWF is operational.    Also at Peñasquito, pre-feasibility studies for the concentrate enrichment process project and the pyrite leach project are advancing and are expected to be completed in late 2014 and early 2015, respectively.  Both of these projects have the potential to significantly enhance the overall economics and mine life of Peñasquito.

The exploration program at Peñasquito continues to focus on defining the copper-gold sulphide-rich skarn deposit located below and adjacent to the diatreme ore body. Current exploration activities include drilling to establish the vertical and horizontal size and extent of the skarn deposit.

The Mineral Resource estimate for the Peñasquito Mine contained in the Technical Report entitled "Peñasquito Polymetalic Operation, Zacatecas State Mexico, NI 43-101 Technical Report" dated January 8, 2014 has been corrected because it did not include an updated increase in Mineral Resources. Refer to page 49 of the third quarter 2014 Management Discussion and Analysis ("MD&A") for the corrected Mineral Resource estimation for the Peñasquito mine as of December 31, 2013.

Gold production at Los Filos was 64,100 ounces in the third quarter at an all-in sustaining cost of $808 per ounce.  Production increased over the prior quarter as mining activity resumed following the second-quarter suspension of mining.  The exploration program continues to focus on in-fill drilling and converting the inferred mineral resources into reserves at El Bermejal north and the underground mine.

At El Sauzal, gold production totaled 6,100 ounces in the third quarter.  Mining was suspended on September 2, 2014 due to pit wall instability and minimal gold production is expected for the remainder of the year. The Company has elected to accelerate the closure of El Sauzal beginning in the fourth quarter of 2014.  Remediation activities required for the closure of the El Sauzal mine continued during the third quarter of 2014 with a focus on over-burden dumps, re-vegetation and tailings re-grading. 

Canada

At Éléonore in Quebec, the Company was pleased to report first gold was poured on October 1, 2014. Mining of ore took place in three stopes during the quarter, with the ore stockpile on surface increasing to 244,000 tonnes at the end of the third quarter. Commercial production remains on track for the first quarter of 2015.  Exploration drilling continued to successfully infill the lower portions of the mine. 

At Red Lake in Ontario, gold production in the third quarter was 99,600 ounces at an all-in sustaining cost of $955 per ounce.   Increased production over the prior quarter was a result of increased grade and tonnes from the High Grade Zone following the completion of planned de-stress activities that contributed to increased stope availability. During the quarter, strong exploration results from surface drilling continued to be received at HG Young, an exciting new target 1.5 kilometers northwest of the Campbell Complex.  Rehabilitation is focused on the 14 Level at the Campbell Complex which will provide access at HG Young for exploration diamond drilling from underground in 2015.

At Porcupine in Ontario, gold production in the third quarter was 74,300 ounces, at an all-in sustaining cost of $946 per ounce.   Production increased as a result of higher tonnage and higher grades.  Higher tonnage was the result of the completion of the #1 Winze rehabilitation early in the quarter, and the increasing grades were a result of the higher grade ore from the Hollinger Open Pit displacing the processing of the lower grade stockpile material.  Over-burden and pre-stripping activities continued at the Hollinger project with approximately 1.2 million tonnes placed on the Environmental Control Berm.  The Environmental Control Berm is targeted for completion in the first quarter of 2015.  Once completed, mining operations will commence 24 hours a day.           

Central America

At the Pueblo Viejo joint venture in the Dominican Republic, Goldcorp's share of third quarter gold production increased to 112,200 ounces, with silver production of 354,800 ounces.  Gold production increased over the prior quarter due to higher grades.  Silver production was lower due to lower recoveries resulting from the down time of two lime boil tanks due to scaling issues during the quarter.  Stripping activities continued to increase during the quarter and are expected to continue for the remainder of 2014 and into 2015.  All-in sustaining costs at Pueblo Viejo decreased for the sixth consecutive quarter to $559 per ounce.

South America

Cerro Negro in Argentina continued to ramp-up following first gold production on July 25, 2014, with commercial production expected in the fourth quarter of 2014.  Gold and silver production for the quarter totaled 19,000 ounces and 233,700 ounces, respectively. Production mining continues at Eureka, while production mining at Mariana Central is expected to commence in the first quarter of 2015. Cerro Negro continues to operate on diesel power generation with permanent power from the national grid now expected by the end of the fourth quarter of 2014.  The initial capital guidance range has been narrowed to between $1.65 and $1.70 billion.

Growth Projects

At the Cochenour project at Red Lake, the haulage drift connecting the Bruce Channel deposit to the Red Lake complex is now complete.    The project remains on track to produce first ore from production stopes in the third quarter of 2015. Exploration drilling in the deeper portions of the deposit continued to yield positive results with eight drill rigs in operation.

At the Camino Rojo project near Peñasquito, the Company intends to commence a pre-feasibility study before the end of 2014, with completion expected in early 2016.  Drilling continued during the third quarter of 2014 to enhance and expand the resource. Metallurgical testing of the sulphide, transition, and oxide zones continues, with waste rock drainage studies for waste material in process.

2014 Guidance Outlook

The Company today reconfirmed 2014 production guidance of between 2.95 and 3.1 million gold ounces. In light of the pit wall instability at El Sauzal and the suspension of activities at Los Filos in the second quarter, the Company expects gold production guidance to be at the low end of the range of between 2.95 million and 3.1 million ounces.   The Company expects all-in sustaining costs at the low end of its guidance range of between $950 and $1,000 per gold ounce.  Capital spending guidance remains unchanged at between $2.3 billion and $2.4 billion for 2014. 

About Goldcorp       

Goldcorp is one of the world's fastest growing gold producers. Its low-cost gold production is located in stable jurisdictions in the Americas and remains 100% unhedged.

This release should be read in conjunction with Goldcorp's third quarter 2014 interim consolidated financial statements and MD&A report on the Company's website, in the "Investor Resources – Reports & Filings" section under "Quarterly Reports".

A conference call will be held on October 30, 2014 at 10:00 a.m. (PDT) to discuss the third quarter results. Participants may join the call by dialing toll free 1-800-355-4959 or 1-416-695-6617 for calls from outside Canada and the US.  A recorded playback of the call can be accessed after the event until November 30, 2014 by dialing 1-800-408-3053 or 1-905-694-9451 for calls outside Canada and the US.  Pass code: 5331726.  A live and archived audio webcast will also be available at www.goldcorp.com.

Cautionary Note Regarding Forward Looking Statements

This press release contains "forward-looking statements", within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation, concerning the business, operations and financial performance and condition of Goldcorp Inc. ("Goldcorp"). Forward-looking statements include, but are not limited to, statements with respect to the future price of gold, silver, copper, lead and zinc, the estimation of mineral reserves and resources, the realization of mineral reserve estimates, the timing and amount of estimated future production, costs of production, capital expenditures, costs and timing of the development of new deposits, success of exploration activities, permitting time lines, hedging practices, currency exchange rate fluctuations, requirements for additional capital, government regulation of mining operations, environmental risks, unanticipated reclamation expenses, timing and possible outcome of pending litigation, title disputes or claims and limitations on insurance coverage.  Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as "plans", "expects", "is expected",  "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", "believes" or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved" or the negative connotation thereof. 

Forward-looking statements are made based upon certain assumptions and other important factors that, if untrue, could cause the actual results, performances or achievements of Goldcorp to be materially different from future results, performances or achievements expressed or implied by such statements.  Such statements and information are based on numerous assumptions regarding present and future business strategies and the environment in which Goldcorp will operate in the future, including the price of gold, anticipated costs and ability to achieve goals. Certain important factors that could cause actual results, performances or achievements to differ materially from those in the forward-looking statements include, among others, gold price volatility, discrepancies between actual and estimated production, mineral reserves and resources and metallurgical recoveries, mining operational and development risks, litigation risks, regulatory restrictions (including environmental regulatory restrictions and liability), activities by governmental authorities (including changes in taxation), currency fluctuations, the speculative nature of gold exploration, the global economic climate, dilution, share price volatility, competition, loss of key employees, additional funding requirements and defective title to mineral claims or property.  Although Goldcorp has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. 

Forward-looking statements are subject to known and unknown risks, uncertainties and other important factors that may cause the actual results, level of activity, performance or achievements of Goldcorp to be materially different from those expressed or implied by such forward-looking statements, including but not limited to: risks related to the integration of acquisitions; risks related to international operations, including economic and political instability in foreign jurisdictions in which Goldcorp operates; risks related to current global financial conditions; risks related to joint venture operations; actual results of current exploration activities; environmental risks; future prices of gold, silver, copper, lead and zinc; possible variations in ore reserves, grade or recovery rates; mine development and operating risks; accidents, labour disputes and other risks of the mining industry; delays in obtaining governmental approvals or financing or in the completion of development or construction activities; risks related to indebtedness and the service of such indebtedness, as well as those factors discussed in the section entitled "Risk Factors" in Goldcorp's annual information form for the year ended December 31, 2013 available at www.sedar.com.  Although Goldcorp has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended.  There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements.  Accordingly, readers should not place undue reliance on forward-looking statements.  Forward-looking statements are made as of the date hereof and accordingly are subject to change after such date.  Except as otherwise indicated by Goldcorp, these statements do not reflect the potential impact of any non-recurring or other special items or of any dispositions, monetizations, mergers, acquisitions, other business combinations or other transactions that may be announced or that may occur after the date hereof.  Forward-looking statements are provided for the purpose of providing information about management's current expectations and plans and allowing investors and others to get a better understanding of our operating environment. Goldcorp does not undertake to update any forward-looking statements that are included in this document, except in accordance with applicable securities laws.

FINANCIAL STATEMENTS TO FOLLOW

SOURCE Goldcorp Inc.

For further information: Jeff Wilhoit, Vice President, Investor Relations, Goldcorp Inc., Telephone: (604) 696-3074, Fax: (604) 696-3001, E-mail: info@goldcorp.com, website: www.goldcorp.com